The royalty fee, of late in the news, is supposedly one of the reasons behind Reliance Communications expansion of its GSM mobile footprint.
The company proposes to start GSM services in new markets of Delhi and Mumbai, besides expand its existing 2 million user base in several other territories across the country.
Speaking to Business Standard from San Diego, Qualcomm India president Kanwalinder Singh, said royalties on handsets charged by the company are in single digits and do not have a meaningful impact on the cost of devices.
"Royalties are paid by device makers, not operators. Royalties on devices are a very small contributor to the cost of handsets. Our royalties are a function of the wholesale net selling price (after some deductions) of the handset", he said.
Singh added that CDMA operators in India were sourcing handsets in the sub-$40 wholesale price range. Given that, he feels the royalty overhead worked out to $2 (less than Rs 90) per handset. Any reduction by this amount, he said, would not make too much of a difference to end user prices.
Singh added the suggestion that the royalty overhead in India is higher than other countries, "is wrong". Qualcomm is now expected to make its position on the matter public next week.
The company brass may also visit India to meet up with key decision makers and correct any misinformation. "We are in conversation with various policy makers (in India)", he added.
Refusing to be drawn into a debate over Reliance Communications expansion in the GSM space, Singh said, "Based on reports, it appears that Reliance's Mumbai and Delhi plans are linked to CDMA operators not getting enough spectrum. We believe the primary challenge for CDMA operators in India is lack of spectrum. Current Indian regulatory policy favours GSM by making significantly more spectrum available for them. It limits the ability of Reliance and Tata to pursue aggressive subscriber growth plans and to introduce next-generation wireless broadband services".
"The policy is short-sighted, not practised any where else in the world, and will cause distortions like the one reported in the press - an operator can claim double the spectrum by standing in the GSM line rather than the CDMA line," Singh added.
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